Can Groceries Be a Tax Write Off for a Business?

It is a common question for business owners to ask if grocery purchases can be deducted for tax purposes. While the general rule is that personal expenses are not deductible, specific circumstances allow certain food-related costs to qualify as legitimate business write-offs. Understanding these distinctions is important for proper tax reporting.

Understanding Personal Food Expenses

The Internal Revenue Service (IRS) categorizes personal grocery purchases and most food consumed by individuals as non-deductible personal living expenses. Internal Revenue Code (IRC) Section 262 disallows deductions for personal, living, or family expenses. These expenses are considered necessary for daily sustenance, regardless of professional activities.

This rule applies even to individuals with demanding work schedules. For example, groceries for meals consumed at home, even when working from a home office, are not deductible. These costs would be incurred whether or not one was engaged in business.

Groceries for Business Use

While personal groceries are non-deductible, certain grocery purchases can become deductible business expenses when directly tied to business operations. For an expense to be deductible, it must be both “ordinary and necessary” for the business. An ordinary expense is common and accepted in the industry; a necessary expense is helpful and appropriate for the business.

Businesses involved in food production or sales can deduct the cost of ingredients purchased for resale. For instance, a catering company buying produce, meats, or dairy for client meals, or a bakery purchasing flour and sugar, can deduct these as costs of goods sold. This also extends to food samples provided to clients or customers as part of marketing or sales efforts.

Providing meals or snacks to employees on the business premises for the employer’s convenience can also be deductible. This applies if meals are furnished for a substantial non-compensatory business purpose, such as keeping employees on-site during shifts for security or efficiency reasons. Note that starting in 2026, employer-provided meals for convenience may no longer be deductible.

Business Meals

Business meals are distinct from general grocery purchases and have specific deductibility rules. Businesses can deduct 50% of the cost of qualifying business-related meal expenses. This 50% limitation applies to meals with clients, customers, or colleagues where a business discussion occurs.

For a meal to qualify, it must be “ordinary and necessary” for the business, not lavish or extravagant, and the taxpayer or an employee must be present. The meal needs to be directly associated with or occur during a business discussion. For example, a meal with a client where business is discussed before, during, or after the meal qualifies. Entertainment expenses are not deductible, but meals purchased separately from entertainment activities can still be 50% deductible if they meet the business meal criteria.

Documenting Deductible Food Expenses

Accurate record-keeping is important for substantiating any deductible food expense, whether for groceries used in business operations or for business meals. The IRS requires specific information to support these deductions, including the amount, date, place, and business purpose for the expense.

For business meals, additional details are necessary, such as the names of attendees and their business relationship to the taxpayer. Retain original receipts, credit card statements, and maintain a detailed log or diary. Recording these details at the time of the expense or shortly thereafter helps ensure compliance and provides strong evidence in case of an IRS inquiry.